How To Protect You From The Home Foreclosure Avalanche?

According to John Adams from The Georgia Real Estate Report, some ten million adjustable rate loans are slated to undergo a “rate reset” over the next three years, and millions of American homeowners are wondering how they are going to make the new monthly payments, projected to be as much as double their current monthly expense.

The home foreclosure rate has been increased consistently. It doubles from 20,286 in 2001 to 44,981 in 2006 in greater Atlanta area. The expected number of foreclosure homes will be more than 50,000 in 2007 in greater Atlanta area. I believe that the home foreclosure avalanche is just starting. I hope I would be wrong. But, it is coming!

If you are in following situations, you might be in great danger in this avalanche:

1. You put nothing down when you bought your home and there is no equity in your home.

2. You have an interest-only home mortgage loan.

3. You have home mortgage loan that results in negative amortization. That is you only pay minimum allowed.

4. You don’t have enough saving that could give you a cushion to cover you at least 5 to 6 of mortgage payments.

If you are in one or more than one of the situations, you are indeed in high chance to become a victim of this avalanche.

Then, how should you protect you from the home foreclosure avalanche?

1. Take a look of your current financial situation and see if you are in one of the categories I mentioned above. If you are, then, take necessary actions accordingly as followings.

2. Lock your mortgage loan interest  into a fix-rate. Get a 30 years fix-rate loan. If you can, get a 40 years fix-rate loan, especially you feel your monthly payment is high in relation to your current income. This will decrease your monthly payment a little.

3. Refinance you adjustable rate mortgage into a fix-rate mortgage now.

4. Pay a little extra each month towards your principal if you can squeeze a $100 dollars, especially you have an interest-only mortgage.

5. Start saving some money as an emergency fund, ideally in a separate account just for the rainy days. The goal is to build an emergency fund enough for the mortgage payments of 6 months.

If you take actions right now, you will be in better position to protect yourself from the incoming home foreclosure avalanche.

If you are behind your mortgage payments, it is s little bit too late to do any of above. But, you can still do someting to stop the foreclosure. You can read my blog on “How To Stop Your Home Foreclosure” by clicking following link:

http://besthomesellingtips.com/2007/07/19/how-to-stop-your-home-foreclosure/#more-24  

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